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UGA - ACCT - Class Notes - Week 1

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UGA - ACCT - Class Notes - Week 1

School: University of Georgia
Department: Accounting
Course: Principles of Accounting I
Professor: Jennifer Gaver
Term: Spring 2019
Tags:
Name: Accounting notes week1
Description: powerPoint Slides from GA state online
Uploaded: 01/15/2019
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background image ACCT 2101-Principles of Accounting I Accounting - Kimmel, Weygandt, Kieso – 6 th  Ed Joe Patterson CHAPTER 1
INTRODUCTION TO FINANCIAL STATEMENTS
Learning Objective 1
Identify the forms of business organization and the uses of accounting 
information.
Why you take this course
-To understand how a business functions through an understanding of accounting
-To understand how to use accounting information
Forms of business organization -Sole proprietorship -simple to establish
-owner controlled
-tax advantages
-Partnership -simple to establish
-shared control
-broader skills and resources
-tax advantages
-Corporation -easy to transfer ownership
-easy to raise funds
-no personal liability
Users and uses of financial information -What is it? -the information system that identifies, records, and communicates the economic 
events of an organization to interested users
-Why do we do it? -to provide inputs for decision making by users -Who uses it? -internal users – management
-external users – investors, creditors, and others
Ethics in financial reporting -Sarbannes-Oxley Act (sometimes called SOX; passed in 2002) -resulted from fraudulent financial reporting (Enron, Worldcom, HealthSouth, AIG)
-passed to reduce unethical corporate behavior & the likelihood of future corporate 
scandals –requires CEO & CFO to certify the accuracy of financial statements
–requires CEO & CFO to certify that the system of internal controls is adequate
-Internal controls safeguard assets and ensure accurate financial reports. -makes the penalties for fraudulent financial activity much more severe
-increases the oversight role of the board of directors
–requires that the audit committee of the board of directors must be comprised entirely
of independent members (nonemployees) and must contain at least one financial 
expert
-increases the independence of outside auditors who review the financial statements
-requires outside auditors to attest that the system of internal controls is adequate
-established the Public Company Accounting Oversight Board (PCAOB)
-PCAOB establishes auditing standards and regulates auditor activity. -Solving an ethical dilemma (steps) -Recognize an ethical situation and the ethical issues involved.
-Identify and analyze the stakeholders (persons or groups who may be harmed or 
benefited). -Identify the alternatives and weigh the impact of each alternative on various  stakeholders. Learning Objective 2 1
background image ACCT 2101-Principles of Accounting I Accounting - Kimmel, Weygandt, Kieso – 6 th  Ed Joe Patterson Explain the three principal types of business activity.
Business activities
-Financing activities – obtaining the funds to start and expand the business -borrowing money
-selling stock
-Investing activities – buying the assets needed to operate the business
-Operating activities – carrying on the daily activities of the business
Learning Objective 3
Describe the four financial statements and how they are prepared.
Income statement -Income statement-reports revenues, expenses & resulting net income or net loss over a fiscal  period -fiscal period – an accounting period of time (month, quarter, year) -Revenue -increase in assets that results from operating the business (sale of product or service)
-increase in stockholders’ equity that results from operating the business
-Expense -decrease in assets that results from operating the business (generating revenues)
-decrease in stockholders’ equity that results from operating the business
Retained earnings statement Retained earnings statement – reports the changes in Retained Earnings over a fiscal period
-Retained Earnings
-net income (current period and previous periods) kept in the corporation for future use
-net income not distributed to stockholders as dividends
-Net Income -amount by which revenues exceed expenses in a particular period
-increases Retained Earnings
-Net Loss -amount by which expenses exceed revenues in a particular period
-decreases Retained Earnings
-Dividends -distributions of net income to stockholders
-decrease Retained Earnings
Balance sheet -Balance sheet – reports assets, liabilities, and stockholders’ equity at a specific date
BALANCE SHEET EQUATION:  ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY
-Assets
-resources that will provide future economic benefit
-anything the business has that will provide future economic benefit
-Liabilities -claims of creditors on the assets of the business
-debts
-Stockholders’ Equity -claims of owners on the assets of the business
-2 parts – Common Stock & Retained Earnings
Statement of cash flows -Statement of Cash Flows – reports cash inflows and cash outflows over a fiscal period
NOTE:  We study the Statement of Cash flows in detail in Chapter 12.
Interrelationships of statements -The net income or net loss for the fiscal period -is computed on the income statement and
-is carried to the retained earnings statement
-The Retained Earnings at the end of the fiscal period -is computed on the retained earnings statement and
-is carried to the balance sheet
-The cash balance at the end of the fiscal period -is included in the assets section of the balance sheet and 2

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School: University of Georgia
Department: Accounting
Course: Principles of Accounting I
Professor: Jennifer Gaver
Term: Spring 2019
Tags:
Name: Accounting notes week1
Description: powerPoint Slides from GA state online
Uploaded: 01/15/2019
6 Pages 65 Views 52 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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